Sell Hindustan Petroleum Corporation; target of Rs 319: Prabhudas Lilladher

Prabhudas Lilladher's research report on Hindustan Petroleum Corporation

Hindustan Petroleum Corporation (HPCL) reported better-than-expected Q4 results with standalone EBITDA of Rs58bn (up 20.8% YoY; PLe: Rs35.6bn, BBGe:Rs40.5bn) and PAT of Rs33.5bn (up 18% YoY; PLe: Rs10.8bn, BBGe: Rs16.8bn). On the refining front, GRM came in at USD8.5/bbl. GMM stood at Rs4.6/lit, and under-recovery on sale of LPG stood at Rs33bn. The stock is trading at 1.3x FY27 P/BV. In Q1-TD, Singapore GRM has remains at USD3.6/bbl, with strength in past few days. Average marketing margins on petrol/ diesel stand at Rs12.6/9.8/lit.

Outlook

We believe GRMs will rebound to the long-term average of USD5-7/bbl in FY26/27 and build in a GRM of USD6/6/bbl for FY26/27E. On the marketing front, we build in a GMM of Rs4.9/4.5/lit for FY25/26/27E. We maintain Sell rating with a TP of Rs 319 based on 1.0x FY27 P/BV.